Exorbitant costs of gene therapy raise payment concerns for patients and government

[Editor’s note: Executives from several companies developing gene therapies gathered for a panel discussion at the recent Forbes Healthcare Summit, where they discussed pricing issues.]

Jeffrey Marrazzo, the co-founder and chief executive officer of Spark Therapeutics, has an approach to valuing his company’s gene therapy treatment for a rare form of blindness that even he realizes may be controversial.

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Spark has undertaken extensive research and modeling to figure out how much it would be worth for one patient to be cured of blindness—a process that has included looking at the costs to both that patient and to society as a whole, said Marrazzo during a panel discussion at the Forbes Healthcare Summit on Thursday. “When we modeled that, we thought we could easily value [the therapy] in excess of $1 million,” he said.

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[Critic Steve] Miller proposed several alternative payment plans for pricey one-time treatments, including value-based pricing. Novartis has been an early adopter of value-based pricing. In fact, the company struck a deal on Kymriah with the Centers for Medicare and Medicaid Services (CMS), which stipulates that the government-run insurance plan will only pay for the treatment when patients respond within the first month after receiving it.

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Just how healthcare payers will react to a $1 million gene therapy—should Spark decide that’s the right price—remains to be seen.